Wealthfront vs Betterment: Choosing the Best Robo-Advisor

Updated March 28, 2025

6 min read

Weathfront and Betterment are considered top-of-class robo-advisors for their tools that automate the investment process, based on factors like individual risk tolerance and financial goals. Both platforms are well-known in the fintech services space — but for different reasons.

As you search for the robo-advisor that best fits your needs, let’s explore the pros and cons of Wealthfront vs Betterment.

What is Wealthfront, and how does it work?

Wealthfront is an automated investing platform. Its focus lies in robo-investing — an automated, technology-driven investing strategy, tailored to investor guidelines and preferences.

The fintech firm offers passive investors exposure to various asset classes, from exchange-traded funds (ETFs) to money market funds and portfolio lines of credit.

Wealthfront’s Automated Investment Accounts allow users to invest with the help of a dedicated robo-advisor. You can get started simply by defining certain parameters, such as risk tolerance and asset allocation, and choosing one of three main portfolio types:

Classic
Socially Responsible
Direct Indexing

The Classic focuses on diversified low-cost index funds, while the Socially Responsible is built with sustainability, diversity, and equity in mind. The Direct Indexing Portfolio tracks movements in individual stocks and ETFs to protect against tax losses. Once a path is chosen, the platform’s technology will invest, diversify, and rebalance the portfolio. However, much of this process is automated, affording the user limited control over rebalancing or otherwise redirecting funds.

Wealthfront is known for its flagship Cash Account, a high-yield savings account (HYSA) with an industry-high annual percentage yield (APY). Also noteworthy is its high-yield bond portfolio, which focuses on maximizing after-tax earnings through valuable assets. With a blend of corporate bonds, floating-rate bonds, and tax-advantaged treasuries, it earns a 4.11-4.14% yield.

Wealthfront’s robo-advisor accounts require a $500 minimum initial deposit, which is higher than other comparable products from companies like SoFi and Fidelity. The platform also lacks the ability to invest in crypto coins or tokens. (Investors can contribute to crypto trusts, but they are not eligible for certain features like tax-loss harvesting.)

What is Betterment, and how does it work?

Betterment is valued for its personalized, self-managing investment portfolios. The advisory shop focuses on stock and bond ETFs and Environmental, Social, and Governance (ESG) funds, among other vehicles. Betterment offers a wide range of investment portfolios curated for socially responsible investing or high growth potential.

ETF trading can help you increase returns by unlocking capital gains tax savings. It differs from other strategies like direct indexing, when specific stocks in a particular index are purchased on an investor’s behalf. Shares are then owned directly, rather than through a mutual fund or ETF.

Betterment users are able to select pre-built diversified portfolios that align with specific goals, such as putting money down on a house or paying for a child’s wedding. Its customizable options allow investors to modify asset allocations, but these adjustments must be made within the framework of Betterment’s portfolio strategy and cannot include specific ETF selections.

Betterment has two payment plans.

The basic plan requires a $10 minimum initial deposit, but no minimum account balance to maintain it. Its features include low-cost tax-loss harvesting, asset location, portfolio rebalancing, and dividend reinvesting. This plan is geared toward automation, meaning human advisor access is limited.
The premium plan requires a $100,000 minimum account, which offers unlimited one-on-one certified financial planning (CFP) guidance.

Wealthfront vs Betterment: How do they compare?

When looking at Wealthfront vs Betterment, investors will notice key similarities and differences. Discovering these intricacies can help to realize the gains that best fit your portfolio, risk tolerance, and desired financial outcomes.

Portfolio management

Both companies specialize in robo-advising through several account vehicles, including individual and joint accounts, trusts, IRAs, and cash accounts.

Wealthfront offers more investment types than Betterment, a boon for the hands-off investor who wants to avoid trading independently. Investors who open a line of credit have multiple brokerage account options, including IRAs and 529 plans. Wealthfront’s Automated Investing Account diversifies in up to 17 global asset classes.

Betterment’s value lies in its 100-plus pre-defined options for personalization and allocation, from 100% bonds to 100% stocks.

Both platforms provide limited exposure to cryptocurrency. Betterment shuttered its direct cryptocurrency investing service in late 2024, but still allows users to allocate holdings to ETFs tracking the two most widely traded cryptocurrencies, Bitcoin and Ethereum. Similarly, Wealthfront enables holders of Taxable Investment Accounts and IRAs to invest funds in the iShares Bitcoin and Ethereum ETFs.

Fees

Both Wealthfront and Betterment offer robo-investing, which is generally more cost-effective than traditional advisory shops, but does come with fees.

Minimum deposits: Wealthfront requires a deposit of $500 to open a robo-advising account. Betterment requires an initial deposit of at least $10 to open an investment account, but no minimum balance to maintain it. It also carries an Automated Clearing House (ACH) deposit minimum of $10.
Management fees: Wealthfront’s investing accounts have an annual management fee of 0.25%. Betterment’s annual fee is also 0.25% for its basic plan, but 0.65% for premium services.
HYSAs: Wealthfront provides 4.00% APY on all Cash Accounts, with a $1 minimum deposit. Betterment provides 4.00% APY on the deposit balances in Betterment Cash Reserve, with no minimum balance.
Bonuses: Wealthfront users who fund their first taxable investment account are eligible for a $50 bonus.

Tax strategy

Users of each platform can invest their money through a taxable brokerage account, IRA, Roth IRA, and SEP IRA. Both platforms have some tax-loss harvesting capabilities, too.

Wealthfront has long helped facilitate tax-loss harvesting by allowing its customers to trade in and out of ETFs, and enabled direct indexing of large caps, which it recently expanded from a selection of 100 stocks to the full S&P 500. This product automatically replaces securities that have suffered a loss and then reinvests the funds into other assets that match the portfolio’s target. Account holders can then write off those losses on their tax returns, lowering the bill.

Meanwhile, Betterment offers a “tax-coordinated portfolio” that is designed for investors saving for retirement in multiple accounts. The feature can boost an investor’s cumulative after-tax returns by managing multiple accounts as a single portfolio. Less tax-efficient investments are placed in more favorably taxed accounts to increase portfolio value.

Finding the right robo-advisor for your needs

The optimal choice between Wealthfront and Betterment is largely dependent on your financial priorities.

Betterment provides investors with a transparent fee structure, low minimum deposits, and the ability to access human advisors. Meanwhile, Wealthfront offers a wider range of investing capabilities, catering to those looking for an autonomous product.

While both platforms have their benefits, Wealthfront vs Betterment isn’t the only conversation investors should be having when it comes to choosing the best robo-advisor.

Frec also offers robo-advising and direct indexing services. Unlike those offered by Wealthfront and Betterment, these products are specifically designed to optimize for after-tax gains, and provide more extensive and customizable tax-loss harvesting tools. The scope of Frec’s direct indexing is not limited to the S&P 500, enabling users to gain exposure to small caps or the total market while still maximizing tax advantages.

Moreover, Frec’s Portfolio Allocation feature preserves the benefits of automated investing while also maintaining investors’ decision-making power. For example, investors can choose to make annual one-time cash deposits to solve rebalancing, and avoid the unnecessary taxable events that may be triggered by the fully automated approach of other robo-investing tools.

Ultimately, Wealthfront and Betterment both provide acclaimed robo-advisor products for hands-off investors. But for investors who want more control over their finances while still enjoying the benefits of automation, Frec may be worth a look.

Curious if Frec could be a better fit for your needs? Click here to book a demo.